Explained: LMI waiver for accountants
Generally, borrowers with less than a 20% deposit are required to pay LMI to protect the lenders risk-position in case of default on the loan. The cost of LMI can be significant, but so too can the savings if you are eligible for an LMI waiver for accountants.
Accountants may be able to purchase or refinance earlier and achieve significant cost savings upfront using the LMI waiver for accountants.
Saving for a deposit can be difficult and time-consuming, particularly when Australian house prices has been steadily climbing over many years. So, avoiding LMI is a welcome cost-saving measure often appreciated by borrowers.
Some accounting professionals seeking a home loan may qualify for waived LMI with a deposit as low as 10%.
See my list of accounting roles eligible for a LMI waiver for accountants
Benefits of avoiding LMI
Lenders view the accounting industry as a source of stable and reliable income for accountants, making them attractive borrowers. That is why there are a few lenders oferring accountants an the LMI waiver perk. I have put together a short list of benefits that accountants might enjoy that extend far beyond any immediate cost savings.
LMI savings
LMI waivers can bring substantial upfront savings.
This is because the LMI fee is primarily determined by the loan size and loan-to-value ratio (LVR). Typically, a higher LVR or loan amount would attract a higher LMI premium.
Consider a home loan with a 10% deposit on a $600,000 purchase price compared to a 10% deposit on $1,000,000. A borrower with LMI waived could avoiding LM costs of over $10,000, or even $20,000 for the higher priced property.
Buy a home now?
For eligible accountants, a LMI waiver could see them potentially buy sooner—with less. Instead of saving enough funds to cover a 20% deposit (plus other purchase related costs), home loans for accountants provide an opportunity to buy with a 10% deposit.
This can equate to a big difference in the size of a 20% deposit compared to a 10% deposit. I have illustrated the difference in savings below
For an Australian home priced at around $600,000, borrowers could purchase with a $60,000 deposit (plus other fees like stamp duty) and avoid LMI. This eliminates the need to save an extra $60,000 to reach the 20% deposit threshold. For a $1,000,000 purchase a 10% deposit is $100,000 compared to a 20% deposit of $200,000.
Refinance home loan – no LMI
A refinance home loan for the right borrower can bring numerous benefits, be it lower rates, cash back offers or seeking out a bank with a more sustainable ethos.
A LMI waiver for accountants can also be applicable to refinance home loans for home owners with less than 20% equity, not just purchasing a property.
Investment property(s)
LMI waivers for accountants can also be used buy investment property. Buying an investment property (or multiple properties) with less than a 20% deposit allows an investment property strategy can be undertaken with as little as 10% deposit.
Of course, any investment strategy will require professional tax and financial advice.
My checklist for accountants
Lenders that offer home loans for accountants with waived LMI, lenders apply various tests to determine eligibility for a LMI waiver.
This checklist offers a general guide, but each lender will have their own so do not rule yourself as eligible or ineligible based on this guide. Speak to a professional for what may apply to your situation.
Professional association
Lenders offering home loans for accountants with LMI waivers place a large emphasis on professional memberships of the individual. This is because there are many job roles in which accountants operate that do not have a job tile of ‘accountant’.
Lenders tend to rely on a persons professional membership as a key qualifier and less so their job title. Examples of professional accounting membership bodies are Chartered Accountants Australia & New Zealand (CA) and Certified Practising Accountant (CPA).
Income threshold
Minimum income thresholds to support an application for an LMI waiver is a qualifying tool that can be used in home loans for accountants. Some lenders might need to see income levels over $100,000, but there are cases where no minimum income thresholds need to be met.
Loan types
Loan requirements vary depending on the type of loan and purpose of the home loan. Multiple lenders have scope to waive LMI for both investment and owner-occupied loans. LMI waivers can also be used for both refinance home loans and purchases.
It is worth noting lenders may apply restrictions to loan amounts, LVR, or repayment types when granting an LMI waiver. For instance, investment lending may be considered for interest-only repayments, whereas owner-occupied lending may only have a principal and interest repayment option.
How to qualify for a LMI waiver for accountants
To qualify for an LMI waiver, lenders often begin by understanding the job role of the individual. LMI waivers for accountants see lenders also rely on the professional membership (e.g. CA) of the borrower to assist with qualifying their professional position.
Here are some examples of job roles that individuals could be performing and still be considered for a LMI waiver for accountants. The lender will need to be satisfied they have appropriate professional memberships in line with their own LMI waiver specific guidelines.
Borrowers should speak to a professional as part of any initial enquiries to find out what home loans might be available for your specific job role and circumstances.
FAQs
I am an accountant. How can I get a LMI waiver?
If you want to know if you are eligible for a LMI waiver speak to a mortgage broker or your lender—or both.
With the help of a specialist lender, accountants can explore different options for financing their property purchase or refinance—and determine the best approach for their individual needs.
I am a professional but not an accountant. Can I get a LMI waiver?
Yes, it is possible to get a LMI waiver for professions other than accounting. See my article on LMI waivers for professionals that explore the many occupations lenders will consider waiving LMI for.
Consulting a mortgage broker can be helpful in exploring various options and finding the best loan for your needs.
Can I get a loan with someone who is not an accountant and still access a LMI waiver?
Yes, commonly spouses are considered as joint borrowers. For professionals like accountants, some lenders can consider asset protection benefits and offer a structure that does not have the accountant as a borrower—rather a guarantor.
There needs to be a few things in place for this so early and appropriate legal and financial advice is recommended, as well as having a licensed mortgage broker to assist.
Final word
For eligible borrowers, home loans for accountants can be an attractive option as they can have their LMI costs waived. This can result in significant fee savings and potentially enable them to purchase a property sooner than they might have, with a smaller deposit.
LMI waivers for accountants can provide an opportunity for entry into the real estate market for a primary residence, or investment property – or both.
